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Genesis and Concept of Secretarial Audit Section 204 of the Companies Act, 2013 and rules thereon
Manner of Appointment , Role and Responsibility
SA SA
Here is a Company Secretary who has come here with his family to enjoy vacation
MRI SCAN
Certificate Under Clause 47C of Listing Agreement - 2000
Corporate Governance Clause 49 of Listing Agreement –Compliance Certificate by CA/PCS-2000
Secretarial Companies Certificate- the Companies (Compliance Certificate) Rules, 2001 (Section 383A)
• Unlisted companies with paid-up capital of Rs 10 lakh or more
Secretarial Audit Report for reconciliation of total admitted capital with depositories and total issued and listed capital (CA or CS)
5
Annual Return Certification
Due Diligence certificates / reports for IPO, open offer, bonus issue, GDR issue, Banks etc.
Secretarial Audit and
Annual Return Signing/ certification (Companies Act 2013)
6
(1) The functions of the company secretary shall include,—
(a) to report to the Board about compliance with the provisions of this Act, the rules made there under and other laws applicable to the company;
(b) to ensure that the company complies with the applicable secretarial standards;
(c) to discharge such other duties as may be prescribed.
Explanation.—For the purpose of this section, the expression “secretarial standards”
means secretarial standards issued by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980 and approved by the Central Government.
(2) The provisions contained in section 204 and section 205 shall not affect the duties
and functions of the Board of Directors, chairperson of the company, managing director or whole-time director under this Act, or any other law for the time being in force.
10. Duties of Company Secretary.-
The duties of Company Secretary shall also discharge, the following duties, namely:-
(1) to provide to the directors of the company, collectively and individually, such guidance as they may require, with regard to their duties, responsibilities and powers;
(2) to facilitate the convening of meetings and attend Board, committee and general meetings and maintain the minutes of these meetings;
(3) to obtain approvals from the Board, general meeting, the government and such other authorities as required under the provisions of the Act;
(4) to represent before various regulators, and other authorities under the Act in connection with discharge of various duties under the Act;
(5) to assist the Board in the conduct of the affairs of the company;
(6) to assist and advise the Board in ensuring good corporate governance and in complying with the corporate governance requirements and best practices; and
(7) to discharge such other duties as have been specified under the Act or rules; and
(8) such other duties as may be assigned by the Board from time to time.
The Companies Act, 2013
Section 142- Powers and Duties of Auditors and
Auditing Standards
Appointment of SA- rule 8(4) of the Company
(meetings of Board and its Powers) Rules, 2014
Secretarial Audit for Bigger Companies
Section 204 (1)-(4)
Rule 9 of the Companies (Appointment and
Remuneration of Managerial Personnel Rules, 2014
Form – MR-3
Companies covered:
(a) Every Listed Company (includes Companies whose debentures, warrants are listed) {only listing is criteria- Paid up capital and turnover has no relevance}.
(b) Other class of companies:
(i) Every Public Company having a paid up share capital of fifty crore rupees or more
(ii) Every public company having a turnover of two hundred fifty crore rupees or more
Secretarial Audit Report shall be annexed to Board’s Report
Board in their Report to explain in full any qualification or observation or other remarks made by PCS in his report
Format of Secretarial Audit Report shall be in Form MR-3
For contravention – company, every officer who is in default and PCS punishable with fine – Rs 1 lakh to Rs 5 lakh
12
Board to appoint the Secretarial Auditor by resolution passed only at its meeting and fix his remuneration [Section 179(3)] read with rule 8(4) of the Company (meetings of Board and its Powers) Rules, 2014
Company to file the resolution with ROC [Section 117(3)(g)] –MGT 14 within 30 days
Period of Office: The Act is silent – Appointment may be similar to statutory Auditor appointed under Section 139 (10 years whether Secretarial Auditor is a Proprietor or a firm) or it can be year to year.
Obtain consent of the Secretarial Auditor
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Constitution of Board of Directors P-5
Applicable Statutory Provisions/Statutory Comp,
P-1
Standard Laws- The Co Act, 2013, *SCRA, Specified SEBI Regulations, Listing Agreement DP Act, FEMA
(limited) P-3
The Adherence to Good Corporate Practices
/Corporate Conduct P-1
Adequate notice to directors for Board Meetings, agenda and detailed notes on agenda, system for seeking further information and clarifications before the meeting for meaningful participation. Dissent and its recording P-6,7
other laws as may be applicable specifically to the company P-3
Form – MR-3 * Relevant for Listed Companies
Secretarial Standards of ICSI-P-3
Adequate systems and processes –P-8
Specific events / actions having a major bearing on the company’s affairs in pursuance of the above referred laws. P-9
Verification of Books ,papers, minutes, forms, returns filed : P-2
Proper Board Processes and Compliance Mechanism in place P-2
Signing- P-10
Qualifications /Observations P-4 and P-8
Apparent Compliance
Adequate Compliance
Absolute Compliance
IN-HOUSE GYM OF A COMPANY SECRETARY
HEALTH IS A WEALTH
Laws Specifically Applicable to the Company
Professional Capacity is the wealth
For example for Banks- all laws applicable to Banking Industry
for insurance company-all laws applicable to insurance industry;
Likewise for a company in petroleum sector- all laws applicable to petroleum industry;
Similarly for companies in pharmaceutical sector,
Cement industry etc
Examining and reporting whether the adequate systems and processes are in place to monitor and ensure compliance with general laws like labour laws, competition law and environmental laws.
Capacity Building
Building In house Library for doing required R&D
Preparing Checklists Templates and Matrix for conducting SA
Structuring Template for Secretarial Audit Process
Pooling of Professional Resources, if required.
Understanding New Concepts/ processes under the Companies Act, Board Composition, Preferential Allotment, Board meeting through Video Conferencing, E-Voting.
Clause 49 of Listing Agreement
Secretarial Standards of ICSI (SS1 and SS2 -as submitted to MCA)
Guidance Note is issued by the Institute of Company Secretaries of India for the Secretarial Audit & the preparation of SAR.
Adherence to the guidance note will be a defense in case of action against PCS.
SIR! SHOULD I INCLUDE THAT DOGGY AS A SPECIAL INVITEE
Managing New Concepts and its legal implications
I Considered the legal definitions, guidelines, solicitors‘ opinions and finally found that only this ROBOT can be appointed as an Independent Director
Do not touch him! He is an Independent Director
© VikaShnila
RECEIVE FORMAL LETTER OF APPOINTMENT
PRELIMINARY DISCUSSIONS
TEAM BUILDING – In House Training
PREPARING AUDIT SCHEDULE
DECIDE AUDIT TOOLS TO BE USED-TEST CHECKS, INTERVIEWS AND ANALYSIS
TAKE SEARCH OF A COMPANY ON MCA AND STOCK EXCHANGE WEBSITES, COMPANY WEB SITE
FORM UNBIASED AND OBJECTIVE VIEW
THOUGH ADMITTEDLY CERTAIN SUBJECTIVITY EXISTS – WHEN ONE EXPRESSES AN OPINION
AUDIT DIARY
KEEPING AUDIT TRAILS
PREPARE DRAFT REPORT / FINAL AUDIT REPORT
PRESERVING SECRETARIAL AUDIT AND SUPPORTING PAPERS FOR 8 YEARS
• A letter of representation will have to be obtained from the auditee company before reporting about so many things including inter alia:
• Whether further information or clarification on agenda was called by directors. If yes, whether the same was provided or not? In what manner meaningful participation is to be ensured in the meeting?
• Whether any dissent was expressed by any director. If yes, whether the same was recorded or not?
• Whether any event or action took place in the auditee company which may have bearing on the compliances under various law, regulations, guidelines, standards and etc. e.g Whether a register kept open for inspection?
• Answers to such and few other questions can be given only by the
auditee company and PCS cannot verify these independently.
PCS Should come out of typical mind set and need to understand micro issues of Corporate Governance and Substantive Law as SA is going to be very Challenging and will prove as game changer for CS profession.
He was a very Shrewd Director
He was very Generous He would have brought
the Company Back on the Track
I SHOULD FILE FROM NO DIR -12
Coming out of forms and procedures alone and focusing on substantive law is crucial for Secretarial Audit
The relevance of SAR is to the stakeholders consisting of shareholders, creditors regulators, government and public at large.
Secretarial Audit is an independent objective Assurance intended to add value & improve the quality & compliance level of the Company.
There has to be systematic and disciplined approach towards the Secretarial Audit by the Secretarial Auditor as well as the company.
ECS and PCS should Appreciate that they have to play respective role in the activity of Secretarial Audit;
Ego clashes should not affect the quality and outcome of Secretarial Audit;
ECS and PCS should understand each other's stand point in the best interest and purpose of the Secretarial Audit.
Age and experience of ECS and PCS should not come in way of the assignment.
ECS and PCS should be fair and professional to each other.
ECS should appreciate that he opinion of an independent party is needed because a company may not be objective with respect to its own documents and records which is subject matter of Secretarial Audit.
Any qualification in Secretarial Audit report shall be taken in proper perspective and spirit.
Many such situational and role conflicts need to be managed from time to time.
How do you spell the color Grey or Gray?
Which is correct ...
Well, the answer is they are both correct.
There are two acceptable spellings.
Gray is used primarily in the United States and
other areas that use US English.
Always have gratitude for the ICSI for pitching for the Secretarial Audit for two decades. Let us support ICSI for taking Secretarial Audit to new and enviable height. Only WE can contribute in that pursuit.
"Life isn't about finding yourself. Life is about creating yourself."
"Life isn't about finding yourself. Life is about creating yourself."
Let us create ourselves as Secretarial Auditors
